International Traffic in Arms Regulations - Restrictions On Retransfer

Restrictions On Retransfer

ITAR also operates to prohibit the “Retransfer” (also called “Re-export”) of items on the USML by foreign persons unless the Retransfer is specifically authorized under the relevant export authorization.

The prohibition on Retransfer stems from the requirement for all export authorizations to include the statement that “he technical data or defense service exported from the United States in furtherance of this agreement and any defense article which may be produced or manufactured from such technical data or defense service may not be transferred to a person in a third country or to a national of a third country except as specifically authorized in this agreement unless the prior written approval of the Department of State has been obtained."

This means that if, for example, a foreign person wants to Retransfer a USML item to another foreign person (such as a subcontractor), both foreign persons must be authorized under the relevant export authorization:

• where the export authorization is a FMS Case, the foreign government must have “Third Party Transfer Approval” from the U.S. Government;
• if the export authorization is an export license such as a DSP-5, all foreign parties must be named on the license (for example, some may be “intermediate consignees”); and
• where the export authorization is a TAA or MLA, all foreign recipients must be named as parties to (or as “authorized sublicensees” under) the agreement.

Where a foreign person requires access to USML items exported under a specific export authorization, but that foreign person is not authorized under the export authorization, the export authorization must be amended and re-approved by the U.S. Department of State. This can be a time-consuming process.